More money in old age! - From January 2026, Germany offers up to 2000 euros extra for pensioners
"Active pension" is the name of the latest model approved by the German government. Thanks to this model, you can earn extra money tax-free after retirement. This offer is intended for those who want to continue working after reaching the regular retirement age. The structure is expected to come into effect on January 1, 2026.
"Active pension" offers tax relief when the employer and the person of retirement age agree to continue the employment relationship. The draft law states that the tax relief "applies regardless of whether the taxpayer receives the pension or postpones receiving it."
Pensioners can receive up to 2,000 euros extra per month, which is not taxed when they continue working. So, if a pensioner earns 2,500 euros gross per month from his job, he only has to pay taxes on 500 euros. The rest is exempt from tax. In other words, people who have reached retirement age can earn up to 24,000 euros per year, which will not be taxed.
This model benefits all those who want to work beyond retirement age, as agreed by both the employee and the employer. Active retirement does not give a person a legal claim to further employment, it simply offers tax relief.
The German Finance Ministry expects that there will be around 168,000 new applicants per year who could take up the offer. This equates to around one in four beneficiaries. From a fiscal perspective, the government is interested in the spread of the model, as both the employer and the employee would pay social security contributions.
The self-employed, civil servants, and those who perform what are called "mini-jobs", i.e. positions where they earn a maximum of 556 Euros per month and a maximum of 70 days per year, do not benefit from the "active pension". Farmers are also excluded from this structure.
With this measure, the German government aims to alleviate the shortage of qualified labor. Germany is facing a major demographic challenge, as 4.8 million workers are set to retire by 2035.
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